Banco Comercial Portugues

Earnings Release • Mar 6, 2017

Disclaimer

• The information in this presentation has been prepared under the scope of the International Financial Reporting Standards ('IFRS') of BCP Group for the purposes of the preparation of the consolidated financial statements under Regulation (CE) 1606/2002
• The figures presented do not constitute any form of commitment by BCP in regard to future earnings
• Figures for 2016 not audited

The business figures presented exclude the former Banco Millennium Angola

• Highlights
• Group
• Profitability
• Liquidity
• Capital
• Portugal
• International operations
• Conclusions

Highlights: profitability

(Million euros)

• Operating net income before impairment and non-usual items increases to €1,024.8 million in 2016 from €590.9 million in 2013
• In spite of significant impairment charges (€1,598 million), a €97.6 million profit was returned in 2016 excluding nonusual items, showing a strong performance from a €22.2 million loss in 2015, and a substantial continuous improvement over the last 4 years
• Stated net profit of €23.9 million in 2016 (€235.3 million in 2015)

*Non-usual items in 2016: gains on Visa transaction, capital gains on Portuguese sovereign debt, impact from revision of collective labour agreement net of restructuring costs, devaluation of corporate restructuring funds and of goodwill, additional impairment charges to increase coverage and fiscal impact; in 2015: capital gains on Portuguese sovereign debt, restructuring costs, and devaluation of corporate restructuring funds; in 2014: capital gains on Portuguese sovereign debt, capital gain on the sale of an insurance subsidiary and AQR provisions; in 2013: costs with mutually-agreed terminations and with early retirements.

• NPEs in Portugal down to €8.5 billion as at December 31, 2016, showing a strong pace of reduction from 2013: €1.4 billion per year, on average
• NPE total coverage* up to 100%, with coverage by loan-loss reserves up to 39% (23% as at year-end 2013), thus supporting the <€7.5 billion NPE target for December 2017
• NPL>90 days down to €5.0 billion as at December 31, 2016, with net new entries showing a significant reduction to €139 million
• Coverage by provisions of NPL>90 days strengthened to 69% as of year-end 2016 (51% as at the end of 2013)

Highlights: capital

Fosun 24% Sonangol 15% EDP 2% PT Retail 29% PT Institut. 7% Non-PT Retail 2% Non-PT Institutionals 21%

• €1.3 billion share capital increase completed in February 7, 2017. Demand exceeded supply by 23%
• Repayment of CoCos and end to State support, the latter having translated into a total cost, including extraordinary contribution by the banking sector, in excess of €1 billion from January 2009 to February 2017
• CET1 ratios reinforced to 11.1% on a fully implemented basis and to 12.8% under phased-in principles**
• Shareholding structure following share capital increase with a significant presence of Portuguese investors (38%) and strong free-float (61%)
• Only bank with equities listed in the PSI-20 index

Highlights: business in Portugal

Individuals			Companies
	Customer acquisition	180,000 new Customers		Customer evaluation	Elected best for Companies, closest to Customers and most innovating bank by DATA E
	Packages	More than 1 million Customers with day-to-day management solutions		Customers	Acquisition and re-activation of 13,500 Customers
	Treasury bonds	Placement of +€700 million variable income Treasury bonds		POSs	Installed POSs up by 12%
	Loans to individuals	New mortgages and consumer loans up from €1.2 billion to €1.5 billion (+28%)		Factoring	Factoring invoicing up by 35%, average credit balance up by 50% from 2015
	Online brokerage	Leading banking group in online brokerage with a 23.7% market share		Support to exports	"Millennium Exportação" conference and "Portugal Global" roadshow
	Digital banking	More than 680,000 active users		Agro business	Partnership with Agroges, designed to support investment related to Rural Development Program 2020

• Highlights
• Group
• Profitability
• Liquidity
• Capital
• Portugal
• International operations
• Conclusions

Profit of €23.9 million in 2016, with a significant improvement of earnings excluding non-usual items

(million euros)	2015	2016	Impact on earnings
Core net income (net int income+commissions–oper. costs)	839.4	908.2	+68.9
Other operating income	56.3	116.5	+60.2
Operating net income (bef. impairment and provisions)	895.7	1,024.8	+129.1
Impairment and provisions	-952.6	-826.9	+125.7
Net income before income tax	-56.9	197.8	+254.8
Income taxes, non-controlling interests and disc. operations	34.8	-100.2	-135.0
Net income excluding non-usual items	-22.2	97.6	+119.8
Non-usual items, net of taxes	257.5	-73.7	-331.2
Net income	235.3	23.9	-211.4

(million euros)	2015	2016	Impact on earnings
Gains on Visa transaction	0.0	96.2	+96.2
Capital gains on Portuguese sovereign debt	396.3	10.0	-386.3
Impact from revision of collective agreement, net of rest. costs	-5.8	185.7	+191.6
Fiscal impact	0.0	281.2	+281.2
Additional impairment charges (to increase coverage)*	0.0	-495.8	-495.8
Devaluation of corporate restructuring funds	-25.2	-224.2	-199.0
Devaluation of goodwill	0.0	-51.0	-51.0
Non-usual items, gross	365.2	-198.0	-563.2
Non-usual items, net of taxes and non-controling interests	257.5	-73.7	-331.2

Profit of €23.9 million in 2016, with a significant improvement of earnings excluding non-usual items…

… as well as core net income, reflecting strong performance in Portugal

Net interest income increase driven by the continuation of reduction of cost of deposits …

… whereas FX devaluation led to lower commissions

Fees and commissions, consolidated				Portugal
					+1.9%
	2015	2016	YoY	448.2	456.6
Banking fees and commissions	529.9	521.0	-1.7%
Cards and transfers	158.8	144.4	-9.1%
Loans and guarantees	160.4	160.3	-0.0%	2015	2016
Bancassurance	75.3	76.7	+1.8%
Customer account related	84.4	90.6	+7.3%	International operations	-0.6% w/o FX
Other fees and commissions	51.0	49.0	-3.9%		impact -11.7%
Market related fees and commissions	130.4	122.8	-5.8%	212.1	187.2
Securities operations	91.3	84.6	-7.3%
Asset management	39.1	38.3	-2.2%
Total fees and commissions	660.3	643.8	-2.5%	2015	2016

Performance of other income influenced by gains on PT sovereign debt in 2015

Cost reduction continues...

(Million euros)

*Core income = net interest income + net fees and commission income. Excluding non-usual items. Cost to core income including non-usual items: 55.0% in 2015 and 41.6% in 2016, in consolidated terms, and 55.5% in 2015 e 36.7% in 2016, in Portugal.

... making Millennium bcp one of the most efficient banks in the Eurozone

We have reinforced the balance sheet with a significant amount of additional impairment and provision charges...

… with lower delinquency and increased coverage

• Highlights
• Group
• Profitability
• Liquidity
• Capital
• Portugal
• International operations
• Conclusions

Deposits influenced by FX impact in international operations; stable individuals' and companies' deposits in Portugal

Credit portfolio reflects support to economy in key business sectors, in spite of continuing deleveraging and NPE reduction

Growing new loans to individuals, new leasing business and factoring invoicing

Comfortable liquidity position

• Highlights
• Group
• Profitability
• Liquidity
• Capital
• Portugal
• International operations
• Conclusions

Strengthened capital, in line with European peers

Capital reinforced, high RWA density

Minimum phased-in capital requirements (SREP)
	Pillar 1	Conservation buffer	Counter cyclical buffer	Other syst. important institutions buffer	Pillar 2 requirements (P2R)	Total require -ments	1 Jan 17 Phased-in
CET1	4.50%	1.25%	0.00%	0.00%	2.40%	8.15%	12.8%
Total capital	8.00%	1.25%	0.00%	0.00%	2.40%	11.65%	14.0%

Capital at comfortable levels, high leverage ratios

Pension fund

Key figures
(Million euros)
		Dec 15	Dec 16
	Pension liabilities	3,136	3,093
	Pension fund	3,158	3,124
	Liabilities' coverage	111%	112%
	Fund's profitability	-0.8%	-2.6%
	Actuarial differences	(111)	(303)

Assumptions

	Dec 15	Dec 16
Discount rate	2.50%	2.10%
	0.75% until 2017	0.25% until 2019
Salary growth rate	1.00% after 2017	0.75% after 2019
	0.00% until 2017	0.00% until 2019
Pensions growth rate	0.50% after 2017	0.50% after 2019
Projected rate of return of fund assets	2.50%	2.10%
Mortality Tables
Men	Tv 73/77-2 years	Tv 88/90
Women	Tv 88/90-3 years	Tv 88/90-3 years

• Change of assumptions: discount rate down to 2.1%, similar to the expected rate of return of the fund; review to wage and pensions growth rates; revision to men's mortality table
• Pension liabilities coverage at 112%

• Negative actuarial differences in 2016 (-€303 million), mainly reflecting a lower discount rate and the fund's underperformance vs assumptions, partially offset by the favourable impact of the revision of wage and pensions growth rates

• Highlights

• Group
• Profitability
• Liquidity
• Capital
• Portugal
• International operations
• Conclusions

Portugal: deleveraging improves liquidity position

Significant improvement of earnings excluding non-usual items

	2015	2016
Net income excluding non-usual items	-213.3	-55.3
Gains on Visa transaction	0.0	20.8
Gains on Portuguese sovereign debt	279.4	7.9
Impact from rev. labour agr. (net of rest. costs)	-4.1	146.7
Fiscal impact	0.0	281.2
Add. impairment charges (to increase coverage)*	0.0	-349.5
Devaluation of corporate restructuring funds	-17.8	-158.1
Devaluation of goodwill	0.0	-51.0
Total non-usual items, net	257.5	-102.0
Net income	44.2	-157.3

• Net income of -€157,3 million in 2016.
• Net income amounted to -€55.3 million in 2016 without non-usual items, a €158.0 million improvement from - €213.3 million in 2015.
• Non-usual items in 2016: gains on Visa transaction, capital gains on Portuguese sovereign debt, impact from revision of collective labour agreement net of restructuring costs, devaluation of corporate restructuring funds and of goodwill, additional impairment charges to increase coverage and fiscal impact; non-usual items in 2015: capital gains on Portuguese sovereign debt, restructuring costs, and devaluation of corporate restructuring funds.

Improvement trend on core income and operating costs continues in Portugal

Lower cost of deposits and NPLs more than compensate for the decreases of credit volumes and Euribor

• Increase in net interest income compared to 2015, reflecting the impact of the consistent reduction of the cost of term deposits and the reduction of NPLs, more than compensating for the negative effect of the reduction of Euribor rates and of lower credit volumes, as well as of the lower contribution from the securities portfolio
• Increased net interest income vs the previous quarter, mainly attributable to lower NPL volumes and to the continuing reduction of the cost of term deposits, more than compensating for a lower credit volume and for the negative effect of the reduction of Euribor rates
• CoCo repayment will have a €65 million positive impact on net interest income

Continued effort to reduce the cost of deposits

	2015	2016	YoY
Banking fees and commissions	389.8	397.0	+1.8%
Cards and transfers	99.5	100.2	+0.8%
Loans and guarantees	118.3	107.6	-9.0%
Bancassurance	75.3	76.7	+1.8%
Customer account related	84.2	90.5	+7.4%
Other fees and commissions	12.5	22.0	+76.5%
Market related fees and commissions	58.4	59.6	+2.0%
Securities operations	52.1	53.5	+2.7%
Asset management	6.2	6.1	-3.1%
Total fees and commissions	448.2	456.6	+1.9%

Continuous reduction of costs, in line with the new commercial approach

Reinforced coverage of NPL>90d

Lower NPEs with reinforced coverage

Foreclosed assets sold above book value

• Highlights
• Group
• Profitability
• Liquidity
• Capital
• Portugal
• International operations
• Conclusions

Contribution from international operations

(Million euros)

Contribution
from
international
operations
increases on a
comparable basis

	2015	2016	Δ % local currency	Δ % euros	ROE
International operations
Poland	124.9	160.3	+28.3%	+22.6%	10.4%
Mozambique	53.0	71.2	+34.3%	-15.4%	23.1%
Angola*	27.8	31.7	+14.3%	-16.3%
Other	10.8	13.3	+23.2%	+21.4%
Net income	216.5	276.5	+27.7%	+4.8%
Non-controlling interests Poland and Mozambique	-74.3	-103.7
Exchange rate effect	34.3	--
Total contribution international operations	176.5	172.8		-2.1%
On a comparable basis:
Millennium Poland shareholding at 50.1% in 1Q15	170.8	172.8		+1.2%
Same as above without FX effect	136.5	172.8		+26.6%

* Contribution of the Angolan operation.

Poland: growing customer funds

New banking tax and Visa Europe transaction strongly impact net earnings

Increase in net interest income and Visa Europe transaction impact

(Million euros)

* Pro forma data. Margin from derivative products, including those from hedging FX denominated loan portfolio, is included in net interest income, whereas in accounting terms, part of this margin (€12.2 million in 2015 and €11.6 million in 2016) is presented in net trading income.| FX effect excluded. €/Zloty constant at December 2016 levels: Income Statement 4.37562917; Balance Sheet 4.4103.

Improved credit quality and comfortable coverage

Mozambique: strong volume growth

Increasing net income in a complex environment

Growth in core income partially offset by the increase in operating costs

Stable credit quality and reinforced coverage

FX effect excluded. €/Metical constant at December 2016 levels: Income Statement 69.49270833; Balance Sheet 75.3100.

51

• Highlights
• Group
• Profitability
• Liquidity
• Capital
• Portugal
• International operations
• Conclusions

			Consolidated
	2015	2016	2018
CT1 / CET1	13.3% phased 10.2% fully	12.8% phased 11.1% fully	≈ 11%
Loans to Deposits	102%	98%	< 100%
Cost – Income**	53.0%	48.5%	< 43%
Cost – Core Income**	54.6%	51.5%	< 50%
Cost of risk	150 bp	216 bp	< 75 bp
ROE	5.3%	0.6%	≈ 10% With CET1 fully implemented of 11%

*Estimated values on January 1, 2017, including the impact of the capital increase and the full reimbursement of CoCos, both concluded on February 2017. **Core income = net interest income + net fees and commission income. Excluding non-usual items. Cost-income including non-usual items:

44.2% in 2015, 37.2% in 2016; cost-core-income including non-usual items: 55.0% in 2015, 41.6% in 2016.

Millennium bcp: a bank focused on its values and ready for the future

Appendix

Sovereign debt portfolio

Sovereign debt portfolio totals €7.8 billion, €1.7 billion of which maturing in less than 1 year

The value of Portuguese and Polish sovereign portfolios increased from December 31st 2015; exposure to Angolan and Mozambican sovereign debt decreased

Sovereign debt portfolio

	Portugal	Poland	Mozambique	Other	Total
Trading book*	164	71	0	37	273
≤ 1 year	6	28	0	36	70
> 1 year and ≤ 2 years	118	2	0	0	121
> 2 years and ≤ 5 years	37	23	0	0	60
> 5 years and ≤ 8 years	1	16	0	0	17
> 8 years and ≤ 10 years	2	2	0	0	4
> 10 years	0	0	0	0	1
Banking book**	3,960	3,252	228	53	7,492
≤ 1 year	704	771	119	0	1,595
> 1 year and ≤ 2 years	301	1,090	20	51	1,461
> 2 years and ≤ 5 years	556	1,361	88	0	2,006
> 5 years and ≤ 8 years	2,061	12	0	1	2,074
> 8 years and ≤ 10 years	337	18	0	1	355
> 10 years	1	0	0	0	1
Total	4,124	3,324	228	90	7,765
≤ 1 year	710	799	119	36	1,665
> 1 year and ≤ 2 years	419	1,092	20	51	1,582
> 2 years and ≤ 5 years	593	1,384	88	0	2,066
> 5 years and ≤ 8 years	2,062	28	0	1	2,091
> 8 years and ≤ 10 years	339	20	0	1	359
> 10 years	1	0	0	1	2

The NPE reduction plan is being implemented

Diversified and collaterised portfolio

• Real estate accounts for 95% of total collateral value
• 80% of the real estate collateral is residential

Consolidated earnings

(million euros)	2015	2016	Impact on earnings
Net interest income	1,190.6	1,230.1	+39.5
Net fees and commissions	660.3	643.8	-16.4
Other operating income	452.7	222.7	-229.9
Of which: Visa transaction	0.0	96.2	+96.2
Of which: Capital gains on Portuguese sovereign debt	396.3	10.0	-386.3
Banking income	2,303.5	2,096.7	-206.8
Staff costs	-573.9	-356.6	+217.3
Of which: Impact from rev. collective agreement, net of rest. costs	-5.8	185.7	+191.6
Other administrative costs and depreciation	-443.4	-423.4	+20.0
Operating costs	-1,017.3	-780.0	+237.3
Operating net income (before impairment and provisions)	1,286.2	1,316.7	+30.5
Of which: core net income	833.6	1,094.0	+260.4
Loans impairment (net of recoveries)	-817.8	-1,116.9	-299.1
Other impairment and provisions	-160.1	-481.1	-321.0
Of which: Devaluation of corporate restructuring funds	-25.2	-224.2	-199.0
Of which: Devaluation of goodwill	0.0	-51.0	-51.0
Impairment and provisions	-977.9	-1,598.0	-620.1
Net income before income tax	308.3	-281.3	-589.6
Income taxes	-37.7	381.9	+419.6
Of which: Fiscal impact	0.0	281.2	+281.2
Non-controlling interests	-125.6	-121.9	+3.7
Net income from discontinued or to be discontinued operations	90.3	45.2	-45.1
Net income	235.3	23.9	-211.4

Consolidated balance sheet

(Million euros)

	31 December	31 December		31 December	31 December
	2016	2015		2016	2015
Assets			Liabilities
Cash and deposits at central banks	1,573.9	1,840.3	Amounts owed to credit institutions	9,938.4	8,591.0
Loans and advances to credit institutions			Amounts owed to customers	48,797.6	51,538.6
Repayable on demand	448.2	776.4	Debt securities	3,512.8	4,768.3
Other loans and advances	1,056.7	921.6	Financial liabilities held for trading	547.6	723.2
Loans and advances to customers	48,017.6	51,970.2	Hedging derivatives	384.0	541.2
Financial assets held for trading	1,048.8	1,188.8	Provisions for liabilities and charges	321.1	284.8
Other financial assets held for trading			Subordinated debt	1,544.6	1,645.4
at fair value through profit or loss	144.9	144.9	Current income tax liabilities	35.4	22.3
Financial assets available for sale	10,596.3	10,779.0	Deferred income tax liabilities	2.7	14.8
Assets with repurchase agreement	20.5	-	Other liabilities	915.5	1,074.7
Hedging derivatives	57.0	73.1	Total Liabilities	65,999.6	69,204.3
Financial assets held to maturity	511.2	494.9
Investments in associated companies	598.9	315.7	Equity
Non current assets held for sale	2,250.2	1,765.4	Share capital	4,268.8	4,094.2
Investment property	12.7	146.3	Treasury stock	(2.9)	(1.2)
Property and equipment	473.9	670.9	Share premium	16.5	16.5
Goodwill and intangible assets	162.1	210.9	Preference shares	59.9	59.9
Current tax assets	17.5	43.6	Other capital instruments	2.9	2.9
Deferred tax assets	3,184.9	2,561.5	Legal and statutory reserves	245.9	223.3
Other assets	1,087.8	974.2	Fair value reserves	(130.6)	23.3
	71,264.8	74,884.9	Reserves and retained earnings	(102.3)	(31.0)
			Net income for the year attrib. to Shareholders	23.9	235.3
			Total equity attrib. to Shareholders of the Bank	4,382.1	4,623.2
			Non-controlling interests	883.1	1,057.4

71,264.8 74,884.9

Total Equity 5,265.2 5,680.6

	Quarterly
	4Q 15	1Q 16	2Q 16	3Q 16	4Q 16 323.1
Net interest income	314.0	292.4	308.4	306.2
Dividends from equity instruments	6.2	2.0	3.8	1.2	0.8
Net fees and commission income	162.3	163.9	156.4	160.8	162.7
Other operating income	-66.4	-12.4	-75.6	-8.3	-9.5
Net trading income	33.5	28.3	154.5	29.7	27.9
Equity accounted earnings	-1.6	13.9	23.8	22.9	19.9
Banking income	447.9	488.1	571.3	512.5	524.8
Staff costs	143.7	138.4	135.2	136.7	-53.8
Other administrative costs	100.0	91.8	93.1	90.1	98.6
Depreciation	13.1	12.8	12.7	11.5	12.8
Operating costs	256.8	243.1	241.0	238.3	57.6
Operating net income bef. imp.	191.1	245.1	330.3	274.2	467.2
Loans impairment (net of recoveries)	204.2	160.7	458.0	251.5	246.7
Other impairm. and provisions	43.0	15.4	182.6	44.9	238.2
Net income before income tax	-56.1	69.1	-310.3	-22.2	-17.8
Income tax	-29.4	15.0	-93.3	10.1	-313.7
Non-controlling interests	20.7	36.4	43.1	21.5	20.8
Net income (before disc. oper.)	-47.3	17.7	-260.2	-53.8	275.0
Net income arising from discont. operations	18.1	29.0	16.2	0.0	0.0
Net income	-29.2	46.7	-243.9	-53.8	275.0

(million euros)	3Q16	4Q16	Impact on earnings
Core net income	228.7	242.4	+13.8 23.8 -21.6 266.2 -7.9 -242.5 -48.3 23.8 -56.2 -0.6 +61.1 23.1 +4.9 251.9 +323.9 275.0 +328.8
Other operating income	45.4
Operating net income (bef. impairment and provisions)	274.1
Impairment and provisions	-194.1
Net income before income tax	80.0
Income taxes, non-controlling interests and disc. operations	-61.8
Net income excluding non-usual items	18.2
Non-usual items, net of taxes	-72.1
Net income	-53.8

(Million euros)
												Internatio nal o	peratio	ns
		Gro up		P o rtugal			T o tal		B ank M illennium (P o		land)	M illennium bim (M o z.)			Other int. o peratio ns
	D ec 15	D ec 16	Δ %	D ec 15	D ec 16	Δ %	D ec 15	D ec 16	Δ %	D ec 15	D ec 16	Δ %	D ec 15	D ec 16	Δ %	D ec 15	D ec 16	Δ %
Interest income	2,159	1,910	-11.5%	1,379	1,172	-15.0%	780	738	-5.4%	553	520	-5.9%	221	211	-4.4%	6	6	6.2%
Interest expense	968	680	-29.8%	668	436	-34.7%	301	244	-18.9%	227	176	-22.2%	80	72	-10.9%	-6	-4	35.9%
N et interest inco me	1,191	1,230	3.3%	711	736	3.5%	479	494	3.1%	326	344	5.4%	141	140	-0.7%	12	10	-15.6%
Dividends from equity instruments	10	8	-20.1%	9	7	-20.1%	1	0	-20.0%	1	0	-19.6%	0	0	-25.5%	0	0	--
Intermediatio n margin	1,200	1,238	3.1%	720	743	3.2%	480	494	3.0%	327	345	5.4%	141	140	-0.7%	12	10	-15.6%
Net fees and commission income	660	644	-2.5%	448	457	1.9%	212	187	-11.7%	143	133	-6.9%	45	31	-32.1%	24	24	-2.4%
Other operating income	-120	-106	11.7%	-84	-42	50.4%	-36	-64	-78.7%	-51	-72	-41.9%	16	9	-44.8%	-1	-1	13.1%
B asic inco me	1,741	1,776	2.0%	1,085	1,158	6.8%	656	618	-5.9%	419	405	-3.2%	202	179	-11.2%	3 6	3 3	-6.6%
Net trading income	539	240	-55.4%	443	100	-77.4%	96	140	45.6%	52	112	>100%	40	25	-36.8%	4	3	-28.1%
Equity accounted earnings	24	81	>100%	24	68	>100%	0	13	>100%	0	0	5.1%	0	0	--	0	13	--
B anking inco me	2,304	2,097	-9.0%	1,552	1,326	-14.5%	752	771	2.5%	470	516	9.8%	241	204	-15.4%	4 0	5 0	24.1%
Staff costs	574	357	-37.9%	377	176	-53.3%	197	181	-8.4%	131	128	-2.4%	48	36	-25.1%	18	17	-7.5%
Other administrative costs	389	374	-4.0%	237	233	-1.7%	153	141	-7.7%	100	98	-1.3%	47	37	-21.5%	6	6	-5.6%
Depreciation	54	50	-7.9%	30	29	-2.9%	24	20	-14.2%	12	13	3.9%	11	8	-33.1%	0	0	-26.4%
Operating co sts	1,017	780	-23.3%	644	438	-31.9%	373	342	-8.5%	242	238	-1.6%	106	80	-24.4%	25	23	-7.2%
Operating net inco me bef. imp.	1,286	1,317	2.4%	908	888	-2.2%	379	429	13.3%	228	278	22.0%	135	124	-8.4%	15	2 7	74.8%
Loans impairment (net of recoveries)	818	1,117	36.6%	730	1,045	43.2%	88	72	-18.6%	61	50	-18.0%	25	24	-5.3%	2	-2	<-100%
Other impairm. and provisions	160	481	>100%	153	471	>100%	7	10	41.8%	3	10	>100%	4	0	<-100%	0	0	75.5%
N et inco me befo re inco me tax	308		-281 <-100%	2 5	-628	<-100%	283	347	22.4%	164	218	32.5%	106	100	-5.2%	13	2 8	>100%
Income tax	38	-382	<-100%	-18	-470	<-100%	56	88	56.2%	34	58	70.8%	20	28	37.8%	2	2	-3.4%
Non-controlling interests	126	122	-3.0%	-1	-1	-82.6%	126	123	-2.6%	0	0	--	1	1	-22.9%	125	122	-2.4%
N et inco me (befo re disc. o per.)	145		-21 <-100%	4 4	-157	<-100%	101	136	34.9%	131	160	22.6%	8 4	7 1	-15.4%	-114	-95	16.3%
Net income arising from discont. operations	90	45	-49.9%				76	37	-51.4%							76	37	-51.4%
N et inco me	235	2 4	-89.8%				177	173	-2.1%							-38	-59	-52.7%

Glossary (1/2)

Capitalisation products – includes unit linked saving products and retirement saving plans ("PPR", "PPE" and "PPR/E").

Commercial gap – total loans to customers net of BS impairments accumulated minus on-balance sheet customer funds.

Cost of risk, gross (expressed in bp)- ratio of impairment charges accounted in the period to customer loans (gross).

Cost of risk, net (expressed in bp)- ratio of impairment charges (net of recoveries) accounted to customer loans (gross).

Cost to income – operating costs divided by net operating revenues.

Cost to core income - operating costs divided by the net interest income and net fees and commission income.

Core income - net interest income plus net fees and commission income.

Core net income - corresponding to net interest income plus net commissions deducted from operating costs.

Coverage of credit at risk by balance sheet impairments – total BS impairments accumulated for risks of credit divided by credit at risk (gross)

Coverage of credit at risk by balance sheet impairments and real/financial guarantees –total BS impairments accumulated for risks of credit plus real and financial guarantees divided by credit at risk (gross).

Coverage of non-performing loans by balance sheet impairments – total BS impairments accumulated for risks of credit divided by NPL

Credit at risk – definition broader than the non performing loans which includes also restructured loans whose changes from initial terms have resulted in the bank being in a higher risk position than previously; restructured loans which have resulted in the bank becoming in a lower risk position (e.g. reinforced collateral) are not included in credit at risk.

Credit at risk (net) – credit at risk deducted from BS impairments accumulated for risks of credit.

Customer spread – Difference between the spread on the loans to customers book over 3 months Euribor and the spread on the customers' deposits portfolio over 3 months Euribor.

Debt securities - debt securities issued by the Bank and placed with customers.

Dividends from equity instruments - dividends received from investments in financial assets held for trading and available for sale.

Equity accounted earnings - results appropriated by the Group related to the consolidation of entities where, despite having a significant influence, the Group does not control the financial and operational policies.

Loan book spread - average spread on the loan portfolio over 3 months Euribor.

Loan to value ratio (LTV) – Mortgage amount divided by the appraised value of property.

Loan to Deposits ratio (LTD) – Total loans to customers net of accumulated BS impairments for risks of credit to total customer deposits.

Net interest margin - net interest income for the period as a percentage of average interest earning assets.

Net operating revenues - net interest income, dividends from equity instruments, net commissions, net trading income, equity accounted earnings and other net operating income.

Net trading income - net gains/losses arising from trading and hedging activities, net gains/losses arising from available for sale financial assets, net gains/losses arising from financial assets held to maturity.

Non-performing exposures (according to EBA definition) – Non-performing loans and advances to customers more than 90 days past-due or unlikely to be paid without collateral realisation, even if they recognised as defaulted or impaired. Considers also all the exposures if the on-BS 90 days past due reaches 20% of the outstanding amount of total on-BS exposure of the debtor, even if no pull effect is used for default or impairment classification. Includes also the loans in quarantine period over which the debtor has to prove its ability to meet the restructured conditions, even if forbearance has led to the exit form default or impairments classes.

Non-performing exposures coverage ratio – Total BS impairments plus collaterals and expected loss gap divided by non-performing exposures.

Glossary (2/2)

Non-performing loans – Overdue loans more than 90 days including the non-overdue remaining principal of loans, i.e. portion in arrears, plus non-overdue remaining principal.

Non-performing loans ratio (net) – Loans more than 90 days overdue and doubtful loans reclassified as overdue for provisioning purposes less BS impairments accumulated for credit risk divided by total loans (gross).

Non-performing loans coverage ratio – Total BS impairments accumulated for credit risk divided by overdue and doubtful loans divided.

Loans losses reserves - Total BS impairments.

Loans more than 90 days overdue coverage - total BS impairments accumulated for risk of credit divided by total amount of loans overdue with instalments of capital and interest overdue more than 90 days.

Operating costs - staff costs, other administrative costs and depreciation.

Other impairment and provisions - other financial assets impairment, other assets impairment, in particular provision charges related to assets received as payment in kind not fully covered by collateral, goodwill impairment and other provisions.

Other net income – net commissions, net trading income, other net operating income, dividends from equity instruments and equity accounted earnings.

Other net operating income - other operating income, other net income from non-banking activities and gains from the sale of subsidiaries and other assets.

Overdue loans - loans in arrears, not including the non-overdue remaining principal.

Overdue loans coverage ratio – total BS impairments accumulated for risks of credit divided by total amount of loans overdue with instalments of capital and interest overdue.

Overdue and doubtful loans - loans overdue by more than 90 days and the doubtful loans reclassified as overdue loans for provisioning purposes.

Return on equity (ROE) – Net income divided by the average attributable equity, deducted from preference shares and other capital instruments.

Return on average assets (ROA) – Net income divided by the average total assets.

Securities portfolio - financial assets held for trading, financial assets available for sale, assets with repurchase agreement, financial assets held to maturity and other financial assets held for trading at fair value through net income.

Spread on term deposits portfolio – average spread on terms deposits portfolio over 3 months Euribor.

Tangible Equity – Shareholders equity minus goodwill and intangible assets.

Texas ratio – Non performing exposures divided by the sum of Tangible equity and Loan Losses Reserves i.e. NPE / (Tangible equity + LLRs).

Total customer funds - amounts due to customers (including debt securities), assets under management and capitalisation products.

Total operating income – net interest income, dividends from equity instruments, net fees and commissions income, trading income, equity accounted earnings and other operating income.